Nomura Securities sharply raised its price target on Staples, Inc. (NASDAQ: SPLS) from $12 to $16 but stopped short of lifting its Neutral rating.

"Staples has begun to swallow a few bitter pills," Aram Rubinson states. He highlights that in September 2012 SPLS took a restructuring charge as it decided to close 15 US stores and 45 abroad, ultimately looking to trim its footprint by 15% or more. Staples also hired a talented executive to run International, and it refinanced $1B worth of 9.75% debt with average rates of 3.5%. Congruently, Lowe's decided to shut 20 underperforming stores a year earlier.

"We applaud SPLS for adding "self-help" as a potential catalyst for the share price," the analyst said.

"Unlike Lowe's, Staples does not have a housing rebound waiting for it on the other side. Despite that, we believe there is still some merit to the investment case. Our new target price reflects that. Long-term, SPLS will likely struggle to add value with merchandise margins at retail that are too high at ~40%. That is why we feel compelled to remain Neutral on the shares."

The firm raised FY12E EPS from $1.32 to $1.37; FY13E EPS from $1.25 to $1.41.

Yahoo! Finance Worldwide

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.